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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended JULY 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File No. 0-23920
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REGI U.S., INC.
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(Exact name of small business issuer as specified in its charter)
OREGON 91-1580146
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
185-10751 SHELLBRIDGE WAY, RICHMOND, BC. CANADA V6X 2W8
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(Address of principal executive offices)
(604) 278-5996
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(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
YES X NO
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State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: As of September 11, 1998 - 9,248,300
shares of common stock, no par value.
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<CAPTION>
INDEX
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PART I -- FINANCIAL INFORMATION PAGE
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ITEM 1. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . .2
Balance Sheets as of July 31, 1998 and 1997 (Unaudited). . . . . . . . . . . .3
Statements of Operations for the three months ended July 31, 1998 and 1997
(Unaudited). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Statements of Cash Flows for the three months ended July 31, 1998 and 1997
(Unaudited). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION . . . . . . . . . . . . . . . .6-7
PART II -- OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . .8
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
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PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
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REGI U.S., Inc.
(A Development Stage Company)
Balance Sheets
July 31, 1998 and 1997
(expressed in U.S. dollars)
(Unaudited)
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1998 1997
$ $
<S> <C> <C>
Assets
Current Assets
Cash - 16,945
Fixed Assets 1,535 2,396
Intangible Assets 415,912 108,145
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417,447 127,486
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Liabilities and Stockholders' Equity
Current Liabilities
Cheques issued in excess of funds on deposit 11,250 -
Accounts payable 54,479 116,312
Accrued liabilities 8,300 33,500
Due to affiliates 53,173 65,066
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127,202 214,878
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Convertible Debenture 50,000 50,000
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Stockholders' Equity (Deficit)
Common Stock, 20,000,000 shares authorized without
par value; 9,248,300 and 8,223,300 shares issued
and outstanding respectively. 3,830,401 2,889,065
Deficit Accumulated during the Development Stage (3,590,156) (3,026,457)
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240,245 (137,392)
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417,447 127,486
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REGI U.S., Inc.
(A Development Stage Company)
Statements of Operations
For the three months ended July 31, 1998 and 1997
(expressed in U.S. dollars)
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
$ $
<S> <C> <C>
Revenues - -
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Administrative Expenses
Bank charges and interest 358 144
Foreign exchange (357) 163
Investor relations and consulting 6,000 21,642
Office, rent and telephone 4,382 2,599
Professional fees 1,000 5,776
Transfer agent and regulatory fees 2,780 907
Less: interest and other income - (1,000)
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14,163 30,231
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Research and Development Expenses
Amortization of capital assets 7,065 2,065
Project management 7,500 7,500
Project overhead 4,569 7,814
Prototype design and construction 7,431 8,374
Technical consulting 21,000 9,000
Technical salaries - 5,169
Travel 1,395 5,717
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48,960 45,639
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Net Loss 63,123 75,870
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Net Loss Per Share .01 .01
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Weighted Average Shares Outstanding 9,248,000 8,140,000
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REGI U.S., Inc.
(A Development Stage Company)
Statements of Cash Flows
For the three months ended July 31, 1998 and 1997
(expressed in U.S. dollars)
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
$ $
<S> <C> <C>
Cash Flows to Operating Activities
Net loss (63,123) (75,870)
Adjustments to reconcile
net loss to cash
Amortization 7,065 2,065
Change in non-cash working capital items
Increase in accounts payable and accrued liabilities (9,998) 361
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Net Cash Used by Operating Activities (66,056) (73,444)
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Cash Flows from (to) Financing Activities
Increase in convertible debenture - 50,000
Increase in common stock - 5,000
Increase in advances from affiliate 54,254 64,010
Increase (decrease) in loan from officer - (7,200)
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Net Cash Provided by Financing Activities 54,254 111,810
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Cash Flows to Investing Activity
(Increase) in patents (617) (22,640)
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Net Cash Used by Investing Activity (617) (22,640)
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Increase (decrease) in cash (12,419) 15,726
Cash - beginning of period 1,169 1,219
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Cash (deficiency) - end of period (11,250) 16,945
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Non-cash Financing Activity
50,000 shares issued for AVFS rights
at a deemed value of $.843 per share - 42,165
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
MANAGEMENT'S DISCUSSION
The Company was incorporated in the State of Oregon, U.S.A. on July 27, 1992 and
is in the business of developing and commercially exploiting an improved axial
vane type rotary engine known as the Rand Cam/Direct Charge Engine ("The
Engine"), which is a variation of the original Rand-Cam Engine. The world-wide
marketing and intellectual rights, other than the U.S., are held by Rand Energy
Group Inc. ("REGI") which controls the Company. The Company owns the U.S.
marketing and intellectual rights and has a project cost sharing agreement,
effective May 1, 1993, whereby it will fund 50% of the further development of
The Engine and REGI will fund 50%.
In a development stage company, management devotes most of its activities to
establishing a new business. Planned principle activities have not yet produced
significant revenue. The ability of the Company to emerge from the development
stage with respect to its planned principle business activity is dependent upon
its successful efforts to raise additional equity financing and develop the
market for its products.
PROGRESS REPORT FROM MAY 1, 1998 TO SEPTEMBER 14, 1998
The design of the special transmission oil pump for automobiles has been
completed for prototype fabrication and testing. According to the Company's
engineer, Paul Lamarche, the major advantages of the Rand Cam-TM- design are the
small size, ability to have multiple pressures in one pump and being able to
turn off one half of the pump when a predetermined RPM has been achieved in
order to save on fuel consumption.
The heavy duty test fixture is now operational to test the diesel engine
prototype, which tests will include natural gas and/or propane on the Rand
Cam-TM- engine. It will also be used to test other Rand Cam-TM- applications,
such as the air conditioning compressors and any foreseeable new development
programs. The 100 horsepower electric motor is now operational with fully
variable speeds from 0 - 2000 RPM.
On August 7th, 1998 the Company announced that an agreement was completed with
Trans Air Manufacturing Corporation ("TRANS AIR") to jointly develop and
manufacture a working prototype compressor for air conditioning for buses. Trans
Air, founded in 1979, has successfully manufactured and supported the highest
quality transportation air conditioning systems in the industry using a single
basic premise, which is to make a quality product and stand behind it.
By News Release dated August 19th, 1998 the Company announced that, pursuant to
a private placement of 500,000 units at a price of $2.00 per unit completed in
1995, the warrants forming part of the units were exercisable at a price of
$2.50 per share, expiring on August 16, 1998. Due to the current market price of
the common stock of the Company, the Board of Directors elected to extend the
term of the warrants for an additional six months. Accordingly, the 500,000
warrants are now exercisable on or before February 16, 1999 at a price of $2.50
per share.
On August 24th, 1998 the Company announced that the current oil pump tests
results were successfully completed by the Company's engineers. The Rand Cam-TM-
oil pump was tested up to 650 psi with no signs of stress. The conventional oil
pump pressures peak at 300 psi with 200 psi as the standard operating pressure.
The Company's engineers have commenced the production design for the Rand
Cam-TM- oil pump for commercialization for automotive use to be completed by
November of this year. The Company believes that this unique patented rotary
design should open a completely new opportunity for all pump applications. The
Rand Cam-TM- pump is an efficient, smooth and quiet running design that will
require very little maintenance due to the simplicity of the design.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JULY 31, 1998 COMPARED TO THE
THREE MONTHS ENDED JULY 31, 1997
There were no revenues from product licensing during the periods.
The net loss in 1998 decreased by $13,000 to $63,000 compared to $76,000 in
1997. The decreased net loss in 1998 was due to administrative expenses which
decreased by $16,000 to $14,000 as compared to $30,000 in 1997. The major
components of this decrease was due to a decrease in investor relations
consulting by $15,000 to $6,000 as compared to $21,000 in 1997. Only one full
time consultant was hired for investor relations activities during the quarter.
The Company has cost sharing arrangements with other affiliated companies to
keep overall overhead costs to a minimum.
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Basic ongoing research and development activities took place during the three
months ended July 31, 1998. Paul LaMarche and Patrick Badgley undertook the
majority of development activities during the quarter and were paid technical
consulting fees totalling $21,000 and compared to $14,000 in the comparative
period. The low costs for research and development is due to more cost effective
prototype construction activity than in previous periods.
LIQUIDITY
During the three months ended July 31, 1998, the Company's operations were
financed through advances from its parent company Rand Energy Group Inc.
("RAND"). Rand periodically sells small quantities of common stock of the
Company into the open market and advances the proceeds to the Company as needed.
Unexercised stock options and warrants, if exercised, could raise $1,163,000 of
additional funds.
The Company continues to finance its operations through funding from RAND. The
Company also has a cost sharing arrangement with RAND for ongoing research and
development of the RC/DC Engine. The Company is solely responsible for ongoing
development of the recently acquired world-wide rights (except Canada) to the
Air/Vapor Flow System.
The Company's ability to pay debts as they become due and to finance future
overhead and development is contingent upon receiving funds from RAND which is
dependent upon the ability to sell shares it owns of the Company into the
market.
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<PAGE>
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None
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Signatures
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Dated: September 15, 1998 REGI U.S., INC.
By: /s/ John G. Robertson
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John G. Robertson, President
(Principal Executive Officer)
By: /s/ Jennifer Lorette
---------------------------------
Jennifer Lorette, Chief Financial
Officer
(Principal Financial Officer)
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-START> MAY-01-1998
<PERIOD-END> JUL-31-1998
<CASH> (11,250)
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 458,634
<DEPRECIATION> 41,187
<TOTAL-ASSETS> 417,447
<CURRENT-LIABILITIES> 127,202
<BONDS> 50,000
0
0
<COMMON> 3,830,401
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 417,447
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 63,123
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (63,123)
<INCOME-TAX> 0
<INCOME-CONTINUING> (63,123)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (63,123)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
